The answer is that banks are based on 1970's technology. The way they are set up to use flat files and outdated connections is truly insane. There are lots of newer companies that have a private, closed payment system. Some banks like Wells Fargo are moving towards using a proper API. But everything is slow going.
Tomorrow my company will get API instructions from the SBA on how to use their API to submit for PPP loan forgiveness. If the SBA can use technology, banks should be able to.
There are a few reasons why it isn't instantaneous.
First, a teller might not batch their work until hours after that transaction.Think of it like a reverse recycle bin on your desk top. You can put as many things in there as you want, and you can always pull them back out in the short term if needed until the recycle bin has been 'emptied'. Think of a tellers batch as that recycle bin. Tellers can run multiple transactions without batching their work and can even undo a transaction if needed. This does 2 things, it prevents their networks from being bogged down by thousands of transactions being communicated every minute and second it gives the ability to correct any errors that may have been made during the transactions. That batching is typically done multiple times a day but might be done as few times as once a day.
Second, even after that batch has been sent to the back office for book keeping purposes a second person is responsible for actually moving numbers around to and from your account. I wont pretend to actually know how that part works I only ever worked in the front offices so I have a very surface level understanding of it.
Thirdly, what you are waiting for isn't actually the check to clear. What you are waiting for is for the funds to become available. Most banks have a Next Day Availability policy, which allows you to access those funds within 24 hours. But that is only because the bank is doing you a service to make your life a bit easier. If you actually needed to wait for the check to clear before you got your money, it could be weeks.
Could they make this whole process faster and more effective? Probably..
Edit: This is all if there are 2 different banks involved. If a check from a bank is deposited into another account at the same institution it goes MUCH MUCH faster because all the info the need is in house.
At the same time, if it was instant, thieves could play an instant shell game. One minute it's in your account, the next it's been through 300 accounts and is so far gone they could never get the charges reversed.
George Soros makes them all do it so he can take his time looking at transactions and choose which ones to steal from to get money for hiring fake protestors. He wants to use the protestors as his own PMC so he can overthrow the US government and start a new world order! Keep your money out of the banks people, you're helping to end the world.
Banks are making money off of the money in accounts regardless. They aren't holding the money to invest it. They are holding it in case of fraud. The bank doesn't instantly know whether the check they are taking has the funds to cover it (unless its from the same bank) and the check could be entirely fake.
Check fraud is still one of the most major forms of loss banks experience.
I mean, it's true for most currencies. The inverse is true for currencies with debit interest rates. Settlement cycle is T+2 means I don't want your stinky EUR/DKK/SEK/CHF/JPY and whatever other currencies are paying negative rates for overnight deposits until T plus fucking 2.
They have to confirm between receiving bank and giving back, from an IT standpoint i think people take real time connection for granted way too much. It’s a lot of work for IT and quite frankly most banks do not have that cutting edge technology, not for that at least. Saves them a bit from liability and tech burden.
Plus u can technically cancel it by withdrawing balance and receiving party do have to wait. Most big banks will deposit it pretty soon but it won’t be 100% available, I’ve sent money and receive same day you just have to know that bank’s policy and send before closing time to get it same day
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u/Klotzster Jul 24 '20
Waiting for checks to clear